Avoid defaulting on your Commercial Lease for your Small Business?

it's a slippery slope and once you go down, its really... 

How to avoid defaulting on your Commercial Lease

Have you ever heard of a Deferred Payment Agreement "DPA"?

So you're a small business owner staring at your bank account and realizing the slow economy has finally caught up to you. As you stare aimlessly at your bank statements and scratching your head wondering how you're going to make ends meet. Knowing with the end of the month rapidly approaching you've got some tough decisions to make. 

Should you skip paying the equipment lease? Perhaps you'll skip paying the monthly rent? If the thought of skipping the rent payment crossed your mind let me tell you doing so can have a catastrophic long term effect on the business. Why? Simply, it's a slippery slope and once you go down it its awfully hard to get back up, not to mention all the legal fees you rack up by doing so. Instead of taking that road here's another avenue that may bring similar relief as skipping a payment would without the legal fees and a nasty breach of contract claim. 

Have you ever heard of a Deferred Payment Agreement "DPA"? If you've got students loans like most Americans you've already had a small introduction to the deferred payment process. The trick is taking that process and using it for your business during a financial hardship. Let's get started:

First, contact your Landlord and inform them of your business financial hardship; express your desire to work out a viable and amicable payment solution to keep your business in their building or location. Most building owners and Landlords may be open to this one (1) time solution given the state of the economy and that another empty space equals more lost revenue for them as well. A "DPA" for you means, you take next month's rental payment and spread it over a few months or over the remaining year.

Here's what it looks like:Your monthly rent is $500.00.You will experience a financial hardship paying March's Rent.Your Landlord agrees to defer (March's Rent) $500.00. In March you skip that payment through deferment. Take $500.00 and defer it over the remaining year (Divide $500.00 by the remaining months in the year) $55.55. In April you begin paying $555.55 until the New Year.

In closing if you're plan on approaching your Landlord with a "DPA", it is highly recommended you do so well before the payment in question becomes due. Should your Landlord agree to your "DPA" it's a good idea you have it in hand and ready for their signing. If you need help with a Deferred Payment Agreement(s) for your business please contact our office. 

The Law Offices of Kawalski, Fletcher & Kirkpatrick, P.C. 

(215) 774-1449 or info@kfklawoffice.com ​​

When presented with a commercial lease it is not only good business sense but very prudent for you to have a business Attorney perform a legal review and help negotiate lease terms favorable to you and your business.  

The Law Offices of Kawalski, Fletcher & Kirkpatrick, P.C.
3070 Bristol Pike
Building 2 * Suite 204
Bensalem, PA 19020
Tel: 215 774-1449 * Fax: 215 774-1060

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